Friday, November 12, 2004

The NY Times is reporting that the Chairman, the President and the General Counsel of the American Stock Exchange have received Wells Notices from the SEC regarding an investigation into options trading at the firm.

A Wells Notice is a formal notice to potential defendants that the agency is considering filing formal charges, and affords the potential defendant the opportunity to respond and present arguments why the case should not be brought.

The AMEX, which is owned and operated by the NASD has had trouble in its own regulatory compliance in the past, according to the Times. Allegations include attempted coverups by the exchange, and submitting of false reports to the SEC.

These are of course very serious allegations, and very untimely, given the SEC's current discussions to significantly modify, if not eliminate, self regulation. The exchange, and the NASD, needs to clean up its own shop, pronto, if this type of activity is truly occuring at the self-regulatory agencies.

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